Introduction
In 2021, global food prices recorded a year-on-year increase of 31.3% , standing at the highest level since July 2011. According to the International Monetary Fund (IMF) , increase in food prices threaten the food security of emerging markets such as Sub-Saharan Africa who are more vulnerable due to a high import dependence and inhabitants who constitute two-thirds of the global extreme poor population .
As such, the identification of strategies to address factors driving food price inflation is an imperative for sub-Saharan African countries like Nigeria to attain the Sustainable Development Goal to “End hunger, achieve food security, improve nutrition and promote sustainable agriculture” (SDG 2).
Identifying Nigeria’s Food Price Inflation Drivers
The Nigerian food market recorded the highest increase in food prices in the last decade, reaching a year-on-year peak of 22.95%4 in March 2021. A review of top-5 food commodities (domestic and imports) used in the computation of Nigeria’s food price inflation highlights sporadic differentials in price increases between the 2019-2020 and the 2020-2021 periods as shown in Table 1.
Table 1: Food Price Changes for Select Commodities (2019 – 2021)
S/N Commodity Commodity Prices (N) Oct 19 – Oct 20 Price Change Oct 20 – Oct 21 Price Change
October 2019 October 2020 October 2021
1 Beans – White Black Eye (per Kg) 292.00 300.37 464.74 3% 55%
2 Beans – Brown (per Kg) 308.93 326.88 478.76 6% 46%
3 Palm Oil (per litre) 464.70 515.26 727.21 11% 41%
4 Vegetable Oil (per litre) 502.34 602.04 825.46 20% 37%
5 Titus – Frozen (per Kg) 956.75 1051.36 1424.58 10% 35%
This scenario highlights a combination of imported and domestic food price inflation, justifying the longstanding rhetoric of the inability of Nigeria’s agricultural value chains to fulfil domestic demand. Though it is agreed that the causes of price level changes observed in the real economy are often much more complex to isolate, the low productivity and non-resilience of Nigeria’s agricultural value chains to shocks remain constant underlying factors with very high pass-through rates of negative effects usually evidenced in inflationary trends. The same pattern reoccurred with the onset of the COVID-19 pandemic, as well as other macroeconomic, market and social events before and after, as shown in Figure 1.
Figure 1: Food Price Inflation (%), Nigeria (2011 – 2021)
In support of the assertion that Nigeria’s agricultural value chains suffer from low productivity, a comparative analysis with other African countries shows milder year-on-year post-pandemic food price inflations with Benin, Ghana, Kenya, and South Africa recording 8% , 10.3% , 10.6% and 6.1% respectively in October 2021 against Nigeria’s 18.34% . Whilst the pandemic caused a symmetrical shock across countries, the inflationary effects differ, arguably on the basis of differences in productivity rates and levels of resilience of agricultural value chains in line with latest available data , showing that recorded yields in Nigeria still lag behind continental and global averages.
With rise in global food prices forecast to be sustained well into 2022 and, possibly, beyond, the underlying productivity challenges within Nigeria’s agricultural value chains must be addressed to forestall further shocks. So, the question then is, how can Nigeria improve the productivity of its agricultural value chains to reduce the impact of external and domestic inflationary pressures?
Strategies for Improved Agricultural Value Chain Productivity
Based on an analysis of available data , low productivity in Nigeria is attributable to scale and financing constraints faced by the prevalent small-scale producers and Small and Medium Agribusiness Enterprises (SMAEs), hindering the adoption of more productive technologies and integration across the value chain. Thus, the key to improved productivity across Nigeria’s agricultural value chains lies in the more efficient use of land, labour, and other inputs through technological advancement such as improved seeds, storage and logistics infrastructure etc.
The need for the introduction of productivity-enhancing technologies is not unknown to value chain stakeholders, especially with the establishment of various Government and private-sector interventions for this purpose. These interventions are yet to achieve intended impacts due to poor adoption and scale-related challenges with the prevalence of fragmented landholdings and processing activities.
Considering the smallholding nature of value chain actors, Aliyu Abdulhameed, NIRSAL Plc’s Managing Director/CEO notes that “It is critical to uncover and develop social innovations and/or agribusiness models that can be employed to increase adoption and address scale-related issues.
According to the Food and Agriculture Organisation (FAO) , promoting the active participation of small-scale producers and SMAEs in producer associations, cooperatives, consortia, and agro-industrial clusters can strengthen their capacity and scale to adopt strategies that improve value chain productivity, efficiency, and resilience. Either through co-location or working arrangements, production and/or processing groups can aid members to increase yield by increasing access to improved technologies as seen in the case of the Farm Machinery Cooperative of Benin, which aggregated over 150 agricultural production and processing cooperatives to access mechanisation tools.
In addition to improving the viability of the deployment of mechanisation tools, cooperatives can improve market linkages and access to credit due to the institution of governance structures suited to the KYC requirements of financial institutions and as a derivate of the achievement of scale. This was exemplified in the case of producer cooperatives in the Republic of Benin who accessed loans from FECECAM to source inputs from FOJEDEA and SONAPRA .
Based on the foregoing, the aggregation of value chain players into groups/clusters can serve as a base strategy for Nigeria to improve the viability of smallholder agricultural operations and ease credit constraints for the adoption and implementation of productivity-enhancing technologies. The nitty-gritty of this approach is contained in the Aliyu Abdulhameed-led NIRSAL Plc’s Agro Geo-Cooperative® (AGC) Farming Model. Painstakingly developed and well marketed, NIRSAL’s AGC hands production initiatives to, not only farmers themselves, but also to financiers who would become better able to provide large-ticket financing, follow cashflows, drive extensive economic activity, and generate better returns.
In cognisance of the full scope of existing value chain challenges in Nigeria, Abdulhameed points out that NIRSAL’s AGC and other strategies that promote more efficient land use, “must be layered with defragmentation of land holdings to ensure the commercial deployment of improved technologies and the resuscitation and upgrade of extension services for adequate farm advisory.”
In addition, Abdulhameed calls for an inward-focused approach, “which increases availability of locally produced Improved Seeds and Crop Protection Products (CPPs), improves access to locally-manufactured mechanisation tools, promotes value-added processing and transformation of outputs to products for domestic and export markets, and promotes research for innovation, is required to protect the value chain from the effect of cost-push inflationary pressures from the international market.”
Conclusion
Increasingly, agricultural value chains are being significantly disrupted by shocks resulting in food price inflation. With Nigeria’s population estimated to exceed 400 million by 2050 , the ability to ease inflationary pressures on its citizens is dependent on the productivity, efficiency, and resilience of its agricultural value chains. The adoption of methods and technologies at scale for improved productivity remain key to achieving long-term increases in agricultural production that can deliver increased efficiency of input use and an agriculture sector that is more resilient to extreme and unpredictable inflation-inducing events.
Considering the prevalence of fragmented smallholder value chain actors, Aliyu Abdulhameed believes that the Agro Geo-Cooperative® Farming Model provides an avenue to address financial and scale-related constraints in adopting improved technologies. The drive for the formation of geo cooperatives is being upscaled nationwide by NIRSAL’s Project Monitoring, Reporting and Remediation Offices (PMROs) present in 37 locations across the country. But it must go beyond just one organisation and become a mission for a national base of stakeholders in support of mechanisation and value chain development initiatives of Government, such as the Green Imperative and Special Agro-Industrial Processing Zones (SAPZ).
